Excise Tax Hiked

An excise tax hike on tobacco products has been in effect since February, from 87% to 90%.

The tax increase is expected to raise tax revenue by about THB15 billion (US$429 million) per annum from THB60 billion. It is also expected to reduce the number of smokers. According to Thai Health Promotion Foundation, there are about 12 million smokers in Thailand.

With the new tax rate, retail cigarette prices will go up by 5-10 baht per pack.

Pongsathorn Ansusinha, director of corporate affairs at Philip Morris (Thailand), speaking after the promulgation of the new excise act in the Royal Gazette on March 20, said that the company supports excise tax reform that would introduce a recommended retail selling price and a mixed tax system in the country. He also said the new system will help improve the country’s revenue collection in the long run.

He also said the reform would lead to the sustainability of the government’s revenue collection without the need for a tax increase in the immediate future.

“The new tax system which will allow for a mixed tax system, meaning levying both ad valorem tax and specific tax,” said Ansusinha. “This would prevent the problems from price under-declaration and help boost state revenue collection in line with the tobacco consumption control policy.”

Ansusinha expressed his confidence that the new tax system would enhance Thailand’s economic strength and help bring the country’s tax system closer to international best practice.

“We would have to wait for the announcement of the implementing regulations to see what the effective tax rate would be, but the excise department has maintained the principle of revenue neutrality so as not to create an additional burden to the consumers, which would help in the smooth transition to the new system,” he said.